1. What is PMI Percentage?

PMI (Private Mortgage Insurance) percentage represents the annual cost of mortgage insurance as a percentage of the total loan amount. It helps borrowers understand the relative cost of PMI compared to their mortgage size.

2. How Does the Calculator Work?

The calculator uses the PMI percentage formula:

Where:

• \( Annual\ PMI \) — Annual cost of private mortgage insurance in dollars
• \( Loan\ Amount \) — Total mortgage loan amount in dollars

Explanation: This calculation shows what percentage of your loan amount you're paying annually for mortgage insurance protection.

3. Importance of PMI Calculation

Details: Understanding your PMI percentage helps you evaluate the true cost of your mortgage and make informed decisions about when to cancel PMI or refinance your loan.

4. Using the Calculator

Tips: Enter your annual PMI cost and total loan amount in dollars. Both values must be positive numbers, with loan amount greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a typical PMI percentage?
A: PMI typically ranges from 0.3% to 1.5% of the loan amount annually, depending on credit score, loan-to-value ratio, and other factors.

Q2: When can I cancel PMI?
A: For conventional loans, you can typically request cancellation when your loan-to-value ratio reaches 80%, and it automatically terminates at 78%.

Q3: Does PMI percentage change over time?
A: The percentage typically remains fixed, but the dollar amount may decrease as you pay down your principal balance.

Q4: Are there alternatives to PMI?
A: Yes, options include lender-paid PMI, piggyback loans, or putting down a larger down payment to avoid PMI altogether.

Q5: Is PMI tax deductible?
A: PMI tax deductibility varies by tax year and income level. Consult a tax professional for current regulations.